"The GE, Siemens Fight for Alstom: the Story So Far" (GE; SI; ALO.ALO)

From the WSJ's Corporate Intelligence blog:

The politically-charged, fast-moving tussle for control of Alstom SA, the flagship French power and transport engineering group, has left investors gasping for breath.

But with Alstom officially agreeing on Wednesday to General Electric’s preliminary €12.35 billion ($17.06 billion) offer for its energy-equipment business without shutting the door on a now sweetened alternative offer of up to €11 billion from Siemens, investors can take stock of the situation.

The GE offer:

- Values Alstom’s energy division at €11.4 billion including the €1.9 billion in cash on its books.
- To base four global power-equipment businesses, including hydropower and steam turbines, in France.
- To add French citizen to its board.
- “We’re committing to increase the number of our employees, in particular skilled jobs in engineering and production” in France: CEO Jeff Immelt.
- Deal would close in 2015.

The Siemens offer:

- Up to €11 billion in cash.
- To exchange Siemens’ long-distance and suburban train assets for Alstom’s energy divisions.
- The creation of two new European industrial groups: a France-based train-making company and a Germany-based energy-equipment giant.
- Siemens to retain 19% stake in train-making company though initially stake could be larger.
- “Despite the lack of cooperation of the Alstom CEO, we are prepared to submit a binding offer provided Alstom has granted us four weeks’ access to its management and to the data room in order to conduct a customary due diligence in line with industry standards:” Siemens letter to Alstom management.

The Alstom reaction:

- Accepted GE’s preliminary offer.
- A committee led by board member Jean-Martin Folz to undertake month-long study of offer.
- Decision by June 2.
- To pay GE a penalty worth 1.5% of the acquisition price if the deal doesn’t work out.
- To provide Siemens with fair access to information to allow German group to make its own binding offer.
- Warning to trade unions: “If you’re going to delay things, next time we see each other it will be to talk about the bankruptcy of this company,” CEO Patrick Kron tells labor leaders at a closed door meeting according to Christian Garnier, a union representative who attended....

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